| Wednesday 13 October 2021 Good morning Voornaam,
A look through the headlines and the list of 52-week highs gives a great indication of the narrative in the market and the companies that are on the right side of the momentum trade.
For many years, people wouldn't even buy construction shares with the pension savings of their most-hated ex-spouse. Now, the construction narrative is off to the races and we are seeing Sephaku and PPC at 52-week highs.
I explain the reason for the latest rally in those cement companies in one of today's feature articles.
My biggest surprise yesterday came from Grand Parade Investments, with the company announcing that the Burger King deal will go ahead without any change to the price. I'm astounded that ECP Africa, the private equity buyer, has elected to go through with the deal when they have been told by the Competition Commission that they need to sell the meat plant.
The economics behind rolling out a chain of quick-service restaurants generally require vertical integration in order to make sense. It's too weird for me that the deal economics still stack up despite the Competition Commission's heavy-handed tactics on this deal. I can't help but wonder what ECP's plans will be going forward and whether they have found smart loopholes in the ruling.
We will never know of course, as any restructuring of Burger King will happen outside of the public eye. For Grand Parade shareholders at least, this will come as a huge relief.
RMB Holdings, now a property holding company after various unbundlings in the broader RMB stab le, has provided further details on the cautionary announcement related to approaches made for the properties in the group. The approach by Brightbridge is an indicative offer for the Atterbury and Divercity portfolios, with a proposed deal value of R1.75bn despite the net asset value (NAV) being R2.936bn. Separately, Fledge Capital has made an approach for the Integer 3 portfolio within RMB Holdings, with an indicative offer of R60m for a portfolio with a NAV of R168m.
It's not surprising that the share price fell nearly 6.4% when the indicative prices are so far off the net asset values.
In other property news, shareholders of Hyprop and Equites should check SENS for announcements related to the dividend reinvestment plan. This gives shareholders the option to elect to receive shares instead of a cash dividend. In both cases, the dividend reinvestment price is at a discount to the current price, as the companies want shareholders to choose to receive shares rather than cash. This helps property funds keep their loan-to-value ratios low in a time of need.
In addition to the Sephaku and PPC article, I've written feature articles on Murray & Roberts' latest acquisition in the US and the market's reaction to a trading statement from Altron.
If you haven't done so already, remember to listen to the latest episode of Magi c Markets. Mohammed Nalla and I discussed the thinking behind why listed companies choose to do acquisitions with cash or shares.
Happy Wednesday!
The Finance Ghost |
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Local and Offshore Market News |
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